Barclays analyst drives optimism for housing

May 6, 2013

When an analyst compliments a CEO during an earnings call, that’s nothing. But when a CEO compliments an analyst — that’s news.

That unusual scenario occurred during the USG earnings conference call late last month, when USG CEO James Metcalf fielded a question from Barclays analyst Stephen Kim. After explaining that customers who stocked up on materials earlier in the year are ready to buy again, Metcalf got personal with the analyst, complimenting his recent note comparing the housing market with an old car.

The call quickly moved on to other questions. But a little research shows that Metcalf wasn’t the only person impressed by Kim’s research note.

In his note, Kim compared the Housing market of about 18 months ago with his brown 1972 Oldsmobile station wagon. “The steering was vague, the brakes lazy, and the radio couldn’t play FM stations.” It was the housing market’s version of dilapidated foreclosures and home equity retrenchment.

“After stabilizing in 2012, both new and existing home prices are now accelerating much more rapidly than in the 1990s cycle.”

His research note upgraded the housing sector from “neutral” to “positive,” as he anticipates home prices will grow 10% in 2013 and another 8% in 2014.